Coinbase Bitcoin Self-Directed Solo 401k Investment

A self-directed solo 401k from My Solo 401k Financial may be invested in bitcoin / cryptocurrency using Coinbase, and many of our clients have been making investments in bitcoin using Coinbase since 2014 when the IRS deemed cryptocurrency property.

What is Cryptocurrency?

Per IRS Revenue Ruling 2019-24:

  • Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.
  • Cryptocurrency is a type of virtual currency that uses cryptography to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain.

Most popular cryptocurrencies:

  • Bitcoin
  • Ethereum
  • Litecoin

NOTE: The videos slides have been updated to reflect Coinbase’s updated account setup process.


IRS View on Taxation of Cryptocurrency

Steps to Invest Self-Directed Solo 401k Funds Using Coinbase

STEP 1 – Open a Solo 401k

  • Confirm that you are eligible (self-employed w/ no full-time W2 employees)
  • IRS-approved plan that allows for cryptocurrency investments & provider with experience in helping others invest

STEP 2 – Fund the Solo 401k

  • Open a bank account in the name & EIN of the Solo 401k
  • Rollover Former employer plan or non-Roth IRA funds and/or make 401k contributions

STEP 3 – Open & Fund Account at Cryptocurrency Exchange

  • Open a Cryptocurrency Exchange Account in the name & EIN of the Solo 401k
  • Link the solo 401k bank account to the Coinbase account

STEP 4 – Store Cryptocurrency

  • Separate and segregated wallet exclusively for Solo 401k investments
  • Store in safety deposit box associated with Solo 401k bank account

Solo 401k Bank Account for Cryptocurrency Funding QUESTION

I have already opened up an account at Coinbase in the name of the solo 401k trust. So I have to move the funds from the Schwab brokerage account for the self-directed solo 401k that you helped me to open to a bank account that is in the name of the solo 401k trust and then transfer those funds to the Coinbase solo 401k account? Are there any tax implications?

Correct that you need to open a bank account in the name of the solo 401k plan. You can then move applicable funds from the solo 401k Schwab brokerage account that we assisted in opening to the solo 401k bank account. Given the cryptocurrency exchange requirements, you will need to fund the account at the exchange with funds from a bank account in the name of the Solo 401k. The solo 401k bank account is generally linked to the cryptocurrency account that is titled in the name of the solo 401k plan.

Use My Personal Account for Cryptocurrency/Bitcoin Account QUESTION

I am wondering about companies that don't support Trust accounts. Can I open the bitcoin/crypto account under my name instead of the solo 401k trust? Am I allowed to use them under my identity using funds only from the Solo 401K

This confirms that the accounts at the cryptocurrency exchange must be under the name and employer identification number of the solo 401k.

You cannot open an account under your name and Social Security number and deposit and/or hold solo 401k funds as this would constitute a taxable distribution.

Moreover, the cryptocurrency exchanges are now required to report account activity to the IRS with respect to the tax identification number on the account so this means that the exchange would report the activity under your Social Security number such that the IRS would expect you to report the same activity on your personal tax return (which would not be correct if the activity relates to your solo 401k funds).

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>


  1. Posted March 8, 2021 at 7:22 pm | Permalink

    Hey Mark, is there a way I could contact you regarding some questions funding a crypto 401k?

    • Posted March 8, 2021 at 10:11 pm | Permalink

      Hi and please email me your questions and contact information.

  2. Posted March 9, 2021 at 12:05 am | Permalink

    Am I able to use roth funds to transfer to Coinbase to open an account?

    • Posted March 20, 2021 at 4:15 am | Permalink

      Yes the existing Roth IRA can be invested in a limited liability company (LLC) once it has been transferred to a self-directed Roth IRA with a self-directed IRA custodian such as Forge Trust ( We assist our clients in setting up the LLC and facilitate the investment of the self-directed Roth IRA in the new LLC. Once the self-directed Roth IRA has been invested in the LLC, we can guide you in opening the Coinbase account in the name of the new Roth IRA LLC.

      • Posted May 9, 2021 at 7:39 pm | Permalink

        I’ve tried opening an self directed LLC account with Coinbase. It keeps getting rejected because Coinbase says I can’t use a business account to invest.

  3. Posted March 19, 2021 at 2:39 am | Permalink

    Can I open an Individual Roth IRA crypto currency? to fund my 2020-2021 contibution before April 15, 2021

  4. Posted March 22, 2021 at 2:10 pm | Permalink

    Hey Mark, thanks for all the valuable information! How do you recommend people handle different accounts within the trust itself? For example my wife and I are the employee participants and we each have a Roth/Traditional accounts (for a total of 4). The Coinbase Prime account opening process is LONG at present (2 months) and I managed to get just one account open for the trust itself. Now I’m wondering if I just “rename” it in Coinbase somewhere as one of the accounts “Solo 401k Trust – FBO [My Name] Roth” and call it a day. Thoughts?

    • Posted April 2, 2021 at 5:34 am | Permalink

      Hi and good question. A solo 401k is defined contribution plan not defined benefit plan. As a result, each participants solo 401k funds and sources (i.e., Roth solo 401k and Pretax solo 401k) have to be separately tracked. Because of this requirement, it can be cumbersome to invest in cryptocurrency. A solution, however, is to pool both participants funds under the same solo 401k in an LLC and open the crypto account under the LLC. Such LLC structured is commonly referred to as a “Solo 401k LLC” because the sole member of the LLC is the solo 401k plan. See the following for more information:
      The result is the pooling of both participants solo 401k funds and sources in one LLC, and because both participants participate in the same solo 401k plan, the investment of the solo 401k in the LLC is considered the sole member.

  5. Posted May 14, 2021 at 12:10 am | Permalink

    Thank you for the video. I am trying to set up an account for my solo401K. The interface is not actually the same and I do not see the option for adding “personal investment company” in the drop down menu. It is asking for an Industry and business type with limited drop-down menu choices (different from what you have here). Can you suggest what to select? For the legal entity type i have selected LLC. Then it requests Industry and the choices are: crypto services, agriculture, education, financial services(non-crypto), food and hospitality, government/politics. health/fitness, industrial, media/arts, non-profit/charity. professional services, real estate, retail, technology/IT (non crypto), transportation & shipping, trust.
    The drop-down under that is for business type varies depending on the industry type.

    • Posted May 14, 2021 at 12:44 am | Permalink

      Thanks, see the answer to my question already. got a bit confused during the process

  6. Posted July 17, 2021 at 12:35 am | Permalink

    Hi Mark, I have a question on this statement – ‘Link the solo 401k bank account to the Coinbase account’. Can I directly link my solo 401k trust account at Fidelity to coinbase ? Thanks

  7. Posted September 23, 2021 at 6:30 pm | Permalink

    I have the same question as Nick above. I have a my solo 401-k account. I have maxed my contributions to this account for 2021. Now I am in the process of opening coinbase account and a bank account all under the name of the solo 401-k account. But how do I fund the coinbase account. Am I able to move funds from solo 401-k account to the bank account and then to the coinbase account?

  8. Posted January 26, 2022 at 11:12 pm | Permalink

    Does the crypto wallet (step 4) need to be set up specifically in the name of the trust and is there a way this must be done?

    Can any wallet be used eg:meta mask, or is there something specific that needs to be used for 401k?

  9. Posted April 2, 2022 at 5:13 am | Permalink

    Hello and thank you for this wonderful information.

    I have a crypto account already. I want to transfer those assets into a solo 401K plan. Can I transfer from my personal coinbase account, have a custodian oversee things, but then transfer straight from my personal coinbase account straight into my solo 401k coinbase account? Or do I have to go from a bank account.

    I want to put my personal crypto into this solo 401k as my initial investment. Is that possible?

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